Buying a Home

Buying a home is quite often one of the largest financial investment decisions you will ever make. Whether you are a first-time home buyer, moving up to a larger home, or down-sizing in home, the purchase process can be very complex, and often times confusing. A clear understanding of market conditions, market inventory, and the Purchase Agreement are key to ensure a sound investment on your part, and a home you will enjoy for years to come.

Our successful Buyer Representation Education Program is founded on educating and communicating this process to our clients. We represent you exclusively, and are with you every step of the way, ensuring that you have a clear understanding of the transaction from the beginning stages of the pre-approval process, to the final walk-through and closing of your new home. We are there to represent your best interests, working to meet your daily expectations.

Thinking of Buying a new Home? There are many homes available for sale in Rochester, MN, and in this section you will find valuable information to walk you ABC’s of home-buying. If you would like additional information on purchasing a home, have additional questions not answered here, desire mortgage or financing information, have home inspections questions, etc., please feel free to contact us by clicking here, and our Team will be happy to assist you.

Simplify Your Home Buying Experience – Hire a REALTOR® The process of buying a home is simple. However, within the process lie many potential pitfalls that if not properly managed and overcome could end up costing a buyer a lot of stress and hard earned cash. Hiring a qualified REALTOR® presents you with the best opportunity to effectively navigate through the process and save time, heartache and most importantly, money.

Why should I have Buyer Representation from a Realtor?

The Answer:
You have a Licensed, Knowledgeable Realtor working exclusively for you, educating you daily on all new homes for sale that meet your search criteria, setting all showing appointments for you on all homes listed by all companies, educating you on structural, safety issues, or deferred budget items in a home that may be very costly to you, and the best part of all of this is that there is no cost to you, the Buyer.

Realtors assist you in finding your Mortgage Lender, and finding a loan best suits your needs for the future. We attend and advise you at time of Home Inspection, answer additional financing and insurance questions, educate you on the appraisal process, the final walk-through review of your new home, and finally, the closing, where we hand you the keys to your new home!

My question to you is: "Why wouldn't you use a Realtor?"

Our goal is to make the purchase process exciting and stress-free, and nothing is more exciting to us than helping you find that dream house to become your dream home. Now that's success!

Call us today to set up a time to "walk you through" the process of purchasing your own piece of real estate in today's exciting real estate market. There's no better time to buy than NOW!

Below is a helpful "ABC's of Buying" guide to assit you in the purchase of your new home:

ABC'S of Buying

A) Do your homework: interview and find a Real Estate Agent that you feel is knowledgeable, compatible with you and your needs, and has a strong presence in today's real estate market; call us today to begin your home search or e-mail us at info@rochesterhomes4you.com

B) Get Pre-Approved with a local Mortgage Lender: pre-approval is key - your Lender will inform you of your qualifications to purchase, and what price-range you are approved to purchase in; don't allow several mortgage lenders to obtain your credit score - this can sometimes adversely affect your credit score; talk to your Realtor about different lenders and loan programs available to you, they can provide you with names of reputable and knowledgeable lenders.

C) Once approved, make an appointment with your Realtor for your Buyer Education Consultation; set up an automated email program direct from MLS with your Realtor; schedule an appointment to view homes together.

An important document you will want to review in each and every home of strong interest to you is the Seller's Disclosure Statement. What is it? This is by far one of the most important documents you will review with your Realtor. The Disclosure Statment is filled out by the Sellers, where they tell you about or disclose all known material facts of the home that may inadvertently affect the use and enjoyment of the home; (i.e., water intrusion, older roof needing replacement, radon gas issues, structural or foundation issues/cracks, broken windows, deferred budget items, etc.) This Disclosure Statement will be attached to, and part of the Purchase Agreement, and will be required to be read and signed by you, the Buyer(s); your Realtor will go over this document with you to ensure all disclosures are clear and understood by all parties.

D) Set up weekly showings with your Realtor on homes of your choice, that meet your search criteria; do not shop above your price range; keep your eyes open! that home may be right around the corner, or in the next automated email!

E) Once you've found your home, you will schedule an appointment to write the Purchase Agreement with your Realtor; expect a 1-2 hour appointment - Bring your Pre-Approval Letter from your Mortgage Lender, and bring your check-book as you will need to write an Earnest Money Check, approximately 1% of purchase price of the home (negotiable), which shows you are earnest and have good faith in your efforts to purchase this home. This check will NOT be cashed until we have a signed and accepted offer. Once we have a fully-executed and accepted Purchase Agreement, the Listing Broker has three business days to cash/deposit your check in the Listing Broker's Trust Account. This Earnest Money check will be held in the trust account until your closing day/move-in day, and will appear as a down-payment/credit on the house on your closing statement, called a HUD-1 Statement. Your Realtor will go over this with you at time of Purchase Agreement at length.

Be prepared to choose a closing date/move-in date, (business days only) and you can speak with your Realtor regarding the purchase price you wish to offer on the home; be prepared to talk about adding a contingency to the Purchase Agreement for a Home Inspection, and a Financing Contingency which protects you, the Buyer, in the event of unforseen circumstances.

F) Your Realtor will deliver and present your offer to the Seller/Seller's Agent (called a Listing Agent); your Realtor is working on your behalf to get you the best price to meet today's market conditions. Once the offer is presented by your Realtor, the Listing Agent will review the offer with the Seller, and the Seller has three choices, to reject, accept or counter-offer your offer. Once the offer has been fully negotiated and accepted, you and your Realtor will discuss and schedule a Home Inspection date/time (business days - 9 am, 11am or 2pm approximately).

G) The Home Inspection: you and your Realtor will schedule a Home Inspection, usually costing somewhere between $275.00 -$350.00, paid for by the Buyer at time of Inspection. You and/or your Realtor will need to be present at the Home Inspection (remember, it's a tour of your new home, and a chance to obtain education on heating, cooling, electrical questions, how to change the furnace filter, etc.). Any defects found during the inspection such as safety issues, structural issues or non-functioning issues will be brought to the Seller's attention for repair or replacement in the form of an Amendment, and will be delivered to the Seller's agent for negotiations.

H) Once the Inspection Amendment has been negotiated, you are one step-closer to buying your dream home! You will need to set an appointment with your Mortgage Lender for Loan Application and Final Underwriting of your Loan. You will need to bring with you pay-stubs, tax returns, and W-2's for review with your Lender. (You may have already supplied these documents to your Lender during the pre-approval process). Once you are fully approved and underwritten by the Lender, they will schedule an Appraisal to be completed on your home. The Appraiser is hired by the bank to determine the value of the home you are purchasing by comparing it to neighboring sold homes. The home needs to appraise no less than the purchase price of the home; if it does not, you and your Realtor will need to re-negotiate the purchase price with the Seller/Seller's Agent.

I) Home Owner's Insurance/Hazard Insurance - you will need to obtain a one-year pre-paid homeowner's insurance policy on your new home. You may want to contact the insurance company that insures your automobiles, as they quite often provide discounted rates when insuring both your home and vehicles. If your Insurance Agent has questions regarding the home, have them contact us, your Realtor, to provide them with facts and a Highlight Sheet on your home to better assist them in providing you with appropriate coverage for your home. You will need to have your Insurance Agent fax a copy of your new Insurance Binder to your closing office/title company - your Realtor can also assist you with this. Bring a copy of your Insurance Binder to closing as an added precaution.

J) Transferring Utilities/Phone/Cable - Your Realtor will provide you with names and phone numbers of specified utility companies for your new home service (gas and electric companies). You will need to "set up/transfer service into your name" in your new home as of this date___(your closing date)___.

If you are also selling your home, you will need to "Transfer" the service in your old home/apartment to your new home. Be careful when making these calls; inform the gas and electric companies that you will need to "discontinue service in your name" on your old home, and that you have purchased a new home, and will need to "turn service on" or "transfer service" into your name on your new home as of the date of closing. The key here is not to "cancel" service at your old home or the Buyer will be charged a new and very expensive hook-up/start-up fee that they will not want to pay, and will look to you for payment.

K) The next step is to schedule a Closing Time; this is scheduled by you and your Realtor, with your Title Company or Attorney's Office of choice. Closings occur on business days only, but can be scheduled anytime between 9am-5pm. You will need to bring your photo identifications, cashier's check or personal check as instructed by your lender, and a copy of your insurance binder to closing.

Prior to Closing, a Final Walk-Through Review of the Home you are purchasing will be completed by you and your Realtor, usually an one or two before closing. This is to ensure that the home is in substantially the same condition as the day you wrote the offer, and that no damage has occurred to the home during the period of time between offer and closing. If there are damages to the home at time of final walk-through that were not previously present, or were hidden defects, your Realtor will negotiate these items on your behalf with the Seller/Seller's Agent before signing final paperwork at closing. Once negotiated, the closing takes approximately one-half hour to an hour, and at that time your Realtor will provide you with keys and to your new home!

CONGRATULATIONS!!! You are now a proud homeowner, and a life-long friend and client of The Williams Home Team! We will look forward to many years of continued business together, and the referrals of your friends, family and co-workers for any of their real estate needs!

The Williams Home Team
Tim and Sandy Williams, Coldwell Banker Burnet
Rochester, MN

Real Estate Calculators
Current Interest Rates
Real Estate Glossary

Buying a Home in Southern Minnesota
Resources
Know Your Needs
Contract Review
Processing the Sale

Buying a Home in Southern Minnesota

Step One – Searching for and Selecting a Home
The Williams Home Team website is a fantastic place to start when looking for that one true place you will feel comfortable calling a home. We showcase many outstanding properties on the Rochester and southern Minnesota MLS Listings and would be excited to walk you through these homes until you find the one that is the perfect fit for you based on price, design choices and neighborhood preferences. Once you have found the right home, it is time to take that ultimate step.

Step Two – Making an Offer
Making an offer on a house includes a lot more than just naming a price. There are many qualifications that a buyer must meet including a loan pre-approval letter, presentation of earnest money to be held in an escrow account and a written purchase agreement. This legally binding document includes the terms of the purchase and a schedule of events that will ultimately end in you owning the property. Using a qualified REALTOR® will make this a seamless and worry-free endeavor.

Step Three – Closing
The last step in the process is the most exciting one of all – the moment where you are literally handed the keys to your dreams. The closing process is usually facilitated by the title or escrow company that has held your money in escrow. At the closing you will remit your final deposit, pay the applicable fees and sign all of the final papers including the deed and mortgage which need to be recorded in the State Registry of Deeds.

Resources

The most important part of financing is your knowledge of the options available.

Financing a home is often the scariest part about the process. If you go into the situation knowing some basics, it will reduce a lot of stress from your search. Before you select a home, make sure you know how much mortgage you can afford and what amount of down payment you will need to make. Determine if you can afford a 15 year or 30 year mortgage and which makes the most sense for you. Talk to your REALTOR® about your financial questions. They will help you learn about points, closing costs and how to lock into an interest rate. They will help you understand the difference between pre-qualification and pre-approval as you start your home search. They will explain potential additional costs included in your monthly mortgage payment such as escrow payments and mortgage insurance. Their expertise is invaluable as you choose how to pay for your home.

There exists a mortgage to meet everyone’s needs. These summaries will help you narrow your search. For more help, try one of our home mortgage calculators.

Adjustable Rate Mortgage (ARM)
This is a mortgage that allows the lender to adjust the interest rate periodically on the basis of changes in a specified index. Interest rates may move up or down as market conditions change. The change in interest rate will result in a change in the periodic payments due under the mortgage. ARMs are attractive when short-term interest rates are trending lower.

Balloon Mortgage
This is usually a short-term fixed-rate loan that involves small payments for a certain period of time with the balance due in a single, large payment at a time specified in the contract. Whenever the nballoon mortgage becomes due, the entire unpaid balance is due. Generally, the homeowner must either refinance or sell the property.

Buy-Down
The payment of extra money on a loan now so as to provide a lower interest rate over either a given period or over the life of the loan. To buy-down a mortgage, the buyer pays additional points to the lender which will decrease the interest rate for a specific period.

Conforming Loan
First mortgages and conventional home mortgages up to loan amounts mandated by Congressional directive which meet the qualifications for sale or delivery to either the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC).

Construction Loan
A structured, short-term loan to provide funds necessary to begin construction on buildings or homes.

Conventional Mortgage
A mortgage loan made by an institutional lender without the inclusion of government guarantees such as VA or FHA loans.

Convertible ARM
The convertible ARM is a combination of both fixed-rate and adjustable rate mortgages allowing the best of both options in one package.

Deferred Interest Mortgage
A mortgage in which the payment is not sufficient to cover the principal and the interest and the payment portion of the interest is postponed until a certain date at which time the interest postponed is added to the principle owing.

Federal Home Loan Mortgage Corporation (FHLMC)
The Federal National Mortgage Association is a congressionally chartered, shareholder-owned company and is the largest national supplier of home mortgage funds. It is commonly known as Freddie Mac. The company buys mortgages from lending institutions, pools them with other loans and sells shares to investors. Detailed information may be found at www.freddiemac.com.

Federal Housing Administration (FHA)
Tthe division of the Department of Housing and Urban Development that sets standards for the underwriting of private mortgages and insures residential mortgages made by private lenders.

Federal Housing Administration (FHA) Loans
Federal Housing Administration (FHA) low-rate loans are available to Americans with smaller incomes who are interested in modestly priced homes. Down payment requirements are usually lower than the prevailing ones.

Federal National Mortgage Association (FNMA)
A corporation established by Congress and owned by stockholders, FNMA is the U.S.'s largest supplier of mortgages to home buyers and owners,. Commonly referred to as 'Fannie Mae,' this government-sponsored enterprise is chartered by Congress. This agency buys mortgages from lending institutions, pools them with other loans and sells shares to investors. Detailed information may be found at http://www.fanniemae.com

Fixed-Rate Mortgage
The interest rate you pay and the monthly principal and interest payments are agreed upon from the outset and will not change throughout the entire term of the mortgage.

Government National Mortgage Association (GNMA)
A government-owned corporation within the U.S. Department of Housing and Urban Development, it is also referred to as 'Ginnie Mae,’. This government agency guarantees the payment of principal and interest on all of its pass-through securities and its guarantee is backed in turn by the full faith and credit of the U.S. Government.

Graduated Payment Mortgage (GPM)
A mortgage that usually starts the borrower with low payments that are gradually increased over five to ten years, before leveling off for the remainder of the term of the loan until the loan is fully amortized. Negative amortization usually occurs until the payment reaches the level payment stage. Usually government insured loans (VA or FHA).

Growing Equity Mortgage (GEM)
This is a long-term mortgage whereby the borrower agrees to increase his payment each year by an agreed amount. The added money per payment is applied directly to the outstanding principal on the mortgage. The mortgage thereby is paid off in a shorter number of years.

Renegotiable Rate Mortgage (RRM)
Similar to an Adjustable Rate Mortgage, this type of mortgage allows the interest rates and payments to be adjusted periodically according to an index.

Reverse Annuity Mortgage (RAM)
A type of mortgage where the property's equity serves as security for periodic payments made by the lender to the borrower. Mortgage is generally paid out upon the sale of the property.

Rollover Mortgage (ROM)
A mortgage where the payments are only guaranteed for three, four, or five years. The borrower is allowed to refinance at the end of the term at the interest rate then applicable.

Shared Appreciation Mortgage (SAM)
It is a loan arrangement where two or more parties participate in the purchase of real estate and share the appreciation and tax deduction. Similar to shared equity mortgages.

Veterans' Administration Loans
Mortgage loans to veterans by banks, savings and loans or other lenders that are guaranteed by the Veterans' Administration, enabling veterans to buy a residence with little or no money down.

Wraparound Mortgage
A secondary financing option in which a new larger mortgage is created to encompass the first mortgage. This large second mortgage is used to preserve the low interest rate on the first mortgage for a potential buyer.

Know Your Needs

Drive To Learn
As you choose a home, make sure you check out the neighborhoods of the homes you are looking at. Look for simple things that will add value to homes in the neighborhood. Are homes in good repair and is the landscaping well kept? Are cars parked on the street or in driveways and garages? Are homes far apart or close together? Is there a lot of noise, traffic or pollution in the area? Location is also very important. Look for important government service buildings (police, fire station or library) and nearby commercial developments (restaurants, shopping centers, etc). If transportation is important, search out the nearest bus line or determine the length of your commute to work. If you have or are planning to have kids, it is a good idea to figure out your school district and the schools that are available to you.

Finding The Right Home
Once you have settled on the neighborhood and are ready to walk through homes, be sure to question the seller’s Realtor® about the house. By asking questions about how long the house has been on the market, why it is being sold and if the price has recently been lowered, you may be able to learn information about the seller that will help determine what price to offer for the house. Be sure to ask questions about the condition of the house to ensure it is structurally sound and if there are improvements that the seller is aware need to be made. Also, be sure to ask if the seller will take care of any items in need of repair or replacement.

As you look at the house, pay attention to the cleanliness of the home and yard and also the quality of home structure. This will give you an idea of how the previous owners treated the property. Also, as you look at a house, make sure you are thinking not only about how it works for you today but also how it will serve you in the future as your needs change.

The Offer
Once you find that perfect home, it will be time to make an offer. Working with a qualified Rochester REALTOR® will ensure you get the quality representation and advice you need to make an informed decision. Your REALTOR® will work with you to identify and determine the financial needs for the transaction. You will discuss earnest money, your down payment, the price you are offering and the financial deals of the transaction. Your REALTOR® will also help you choose a proposed move in and closing date along with helping you set a timeline for keeping the offer valid. Your REALTOR® will also provide you and the seller with all salient details of the sale.

Contract Review

Once you have chosen to make an offer on a home, a sales contract must be created that legally binds both sides to the sale of the home. It will outline responsibilities of the parties involved and include information about the sale. A proper contract lists the legal description of the property and its street address. Financing issues such as sale price, earnest money, amount due at settlement, mortgage information and title and escrow company will be discussed. Also included will be issues concerning the home being sold – is there going to be a home inspection or pest inspection and who will pay for it, what is included/excluded in the sale, or if there are any warranties and repairs that are in effect or currently needed. Finally, the contract will list the date of possession and the acceptance date.

Processing the Sale

Once the contract is signed, your REALTOR® will continue to be your advocate and ensure that your best interests are served. They will assist with scheduling all necessary pre-closing inspections and keep you informed of unseen problems as they arise. They will schedule and attend the pre-closing walk through and the closing. Your realtor will also verify that your finances are deposited according to contract specifications.